Land Tenancy and Land Reform

An important legacy of the Spanish colonial period was the
high concentration of land ownership, and the consequent
widespread poverty and agrarian unrest
(see
The Decline of Spanish Rule
, ch. 1). United States administrators and several
Philippine presidential administrations launched land reform
programs to maintain social stability in the countryside. Lack of
sustained political will, however, as well as landlord
resistance, severely limited the impact of the various
initiatives.

Farm size is a significant indicator of concentration of
ownership. Although nationwide approximately 50 percent of farms
in 1980 were less than two hectares, these small farms made up
only 16 percent of total farm area. On the other hand, only about
3 percent of farms were over ten hectares, yet they covered
approximately 25 percent of farm area. Farms also varied in size
based on crops cultivated. Rice farms tended to be smaller; only
9 percent of rice land was on farms as large as ten hectares.
Coconut farms tended to be somewhat larger; approximately 28
percent of the land planted in coconuts was on farms larger than
ten hectares. Sugarcane, however, generally was planted on large
farms. Nearly 80 percent of land planted in sugarcane was on
farms larger than ten hectares. Pineapple plantations were a
special case. Because the two largest producers were subsidiaries
of transnational firms--Del Monte and Castle and Cooke--they were
not permitted to directly own land. The transnationals
circumvented this restriction, however, by leasing land. In 1987
subsidiaries of these two companies leased 21,400 hectares, 40
percent of the total hectarage devoted to pineapple production.

In September 1972, the second presidential decree that Marcos
issued under martial law declared the entire Philippines a land
reform area. A month later, he issued Presidential Decree No. 27,
which contained the specifics of his land reform program. On
paper, the program was the most comprehensive ever attempted in
the Philippines, notwithstanding the fact that only rice and corn
land were included. Holdings of more than seven hectares were to
be purchased and parceled out to individual tenants (up to three
hectares of irrigated, or five hectares of unirrigated, land),
who would then pay off the value of the land over a fifteen-year
period. Sharecroppers on holdings of less than seven hectares
were to be converted to leaseholders, paying fixed rents.

The Marcos land reform program succeeded in breaking down
many of the large haciendas in Central Luzon, a traditional
center of agrarian unrest where landed elite and Marcos allies
were not as numerous as in other parts of the country. In the
country as a whole, however, the program was generally considered
a failure. Only 20 percent of rice and corn land, or 10 percent
of total farm land, was covered by the program, and in 1985,
thirteen years after Marcos's proclamation, 75 percent of the
expected beneficiaries had not become owner-cultivators. By 1988
less than 6 percent of all agricultural households had received a
certificate of land transfer, indicating that the land they were
cultivating had been registered as a land transfer holding. About
half of this group, 2.4 percent, had received titles, referred to
as emancipation patents. Political commitment on the part of the
government waned rather quickly, after Marcos succeeded in
undermining the strength of land elites who had opposed him. Even
where efforts were made, implementation was selective,
mismanaged, and subject to considerable graft and corruption.

The failure of the Marcos land reform program was a major
theme in Aquino's 1986 presidential campaign, and she gave land
reform first priority: "Land-to-the-tiller must become a reality,
instead of an empty slogan." The issue was of some significance
inasmuch as one of the largest landholdings in the country was
her family's 15,000-hectare Hacienda Luisita. But the candidate
was quite clear; the land reform would apply to Hacienda Luisita
as well as to any other landholding. She did not actually begin
to address the land reform question, however, until the issue was
brought to a head in January 1987, when the military attacked a
group of peasants marching to Malacañang, the presidential
residence, to demand action on the promised land reform killing
18 and wounding more than 100 of them. The event galvanized the
government into action: a land reform commission was formed, and
in July 1987, one week before the new Congress convened and her
decree-making powers would be curtailed, Aquino proclaimed the
Comprehensive Agrarian Reform Program. More than 80 percent of
cultivated land and almost 65 percent of agricultural households
were to be included in a phased process that would consider the
type of land and size of holding. In conformity with the
country's new Constitution, provisions for "voluntary land
sharing" and just compensation were included. The important
details of timing, priorities, and minimum legal holdings,
however, were left to be determined by the new Congress, the
majority of whose members were connected to landed interests.

Criticism of Aquino's plan came from both sides. Landowners
thought that it went too far, and peasant organizations
complained that the program did not go far enough and that by
leaving the details to a landlord-dominated Congress, the program
was doomed to failure. A World Bank mission was quite critical of
a draft of the land reform program. In its report, the mission
suggested that in order to limit efforts to subvert the process,
the Comprehensive Agrarian Reform Program needed to be carried
out swiftly rather than in stages, and land prices should be
determined using a mechanical formula rather than subjective
valuation. The World Bank mission also was critical of a
provision allowing incorporated farm entities to distribute stock
to tenants and workers rather than the land itself. The scheme
would be attractive, the mission argued, "to those landowners who
believed that they would not have to live up to the agreement to
transfer the land to the beneficiaries." The mission's
recommendations were largely ignored in the final version of the
government's program.

On June 10, 1988, a year after the proclamation, Congress
passed the Comprehensive Agrarian Reform Law. Landowners were
allowed to retain up to five hectares plus three hectares for
each heir at least fifteen years of age. The program was to be
implemented in phases. The amount of land that could be retained
was to be gradually decreased, and a non-land-transfer,
profit-sharing program could be used as an alternative to actual
land transfer.

Especially controversial was the provision that allowed large
landowners to transfer a portion of the respective corporation's
total assets equivalent in value to that of its land assets, in
lieu of the land being subdivided and distributed to tenants and
farm laborers. In May 1989, the 7,000 tenants of the Aquino
family estate, Hacienda Luisita, agreed to take a 33 percent
share of the hacienda's corporate stock rather than a portion of
the land itself. Because the remaining two-thirds of the stock
(the value of non-land corporate assets) remained with Aquino's
family, effective control of the land did not pass to the
tillers. Proponents of land reform considered the stock-ownership
provision a loophole in the law, and one that many large
landowners would probably use. Following the example of the
Hacienda Luisita, thirty-four agrocorporations had requested
approval for a stock transfer as of mid-1990. Although legal, the
action of the president's family raised questions as to the
president's commitment to land reform.

It is difficult to estimate the cost allowing for inflation
of the Comprehensive Agrarian Reform Program. Early on, in 1988
estimates ranged between P170 billion and P220 billion; the
following year they were as high as P332 billion, of which P83
billion was for land acquisition and P248 billion for support
services and infrastructure. The lowest mentioned figure averages
to P17 billion a year, 2.1 percent of 1988 GNP in the Philippines
and 8.9 percent of government expenditure that year. The sum was
well beyond the capacity of the country, unless tax revenues were
increased substantially and expenditure priorities reordered. To
circumvent this difficulty, the Aquino government planned to
obtain 50 to 60 percent of the funding requirements from foreign
aid. As of 1990, however, success had been minimal.

Government claims that in the first three years of
implementation the Comprehensive Agrarian Reform Program met with
considerable success were open to question. Between July 1987 and
March 1990, 430,730 hectares were distributed. About 80 percent
of this, however, was from the continuation of the Marcos land
reform program. Distribution of privately owned lands other than
land growing rice and corn, 3,470 hectares, was insignificant not
only in absolute terms, but it was also only 2 percent of what
had been targeted. The inability of the Department of Agrarian
Reform to spend its budget also indicated implementation
difficulties. As of June 1990, the department had utilized only
44 percent of the P14.2 billion allocated to it for the period
January 1988-June 1990. In part because of Supreme Court rulings,
the Department of Agrarian Reform cut its land acquisition target
in late 1990 by almost half from 400,000 hectares to 250,000
hectares.

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